EMINENT HOLDINGS P. LTD, MUMBAI V. DCIT CEN CIR 31, MUMBAI

ITA 8200/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75559 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 04-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DANIEL
• Keywords: Rejection of books of accounts; Opportunity of being heard
• Section: 143(3); 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO.8200/M/2010 ( AY: 2007 - 2008 ) M/S. EMINENT HOLDINGS PVT. LTD., 32, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI 400 018. / VS. DCIT, CENTRAL CIRCLE - 31, MUMBAI 400 020. ./ PAN : AAACE3115H ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.8353/M/2010 ( AY: 2007 - 2008 ) DCIT, CENTRAL CIRCLE - 31, MUMBAI - 400 020. / VS. M/S. EMINENT HOLDINGS PVT. LTD., 32, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI 400 018. ./ PAN : AAACE 3115 H ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DHARMESH SHAH / REVENUE BY : SHRI P. DANIEL, DR / DATE OF HEARING :04 .2 .2014 / DATE OF PRONOUNCEMENT : 12 .2 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS. BOTH THESE APPEALS ARE FILED AGAINST THE ORDER OF CIT (A) - 40, MUMBAI DATED 16.9.2010 FOR THE ASSESSMENT YEAR 2007 - 08. SINCE, THE ISSUES RAISED IN BOTH THE APPEALS ARE INTERLINKED, THEREFORE, FO R THE SAKE OF CONVENIENCE, THESE TWO APPEALS ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS. 2 2. FIRSTLY, WE SHALL TAKE UP ITA NO.8200/M/2010 FILED BY THE ASSESSEE ON 26.11.2010 AND THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 250 OF THE ACT. 2. THE LD CIT (A) OUGHT TO HAVE APPRECIATED THAT THE NOTICES ISSUED BY THE A O ARE INVALID AND HENCE THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS ALSO VOID AB INITIO. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS AND IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. 4. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AMOUNTING TO RS. 5,14,455 / - TOWARDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. 5. THE LD CIT (A) HAS ERRED I N LAW AND IN FACTS IN CALCULATING BOOK PROFIT U/S 115JB AMOUNTING TO RS. 61,62,343 / - . 3. AT THE OUTSET, SHRI DHARMESH SHAH, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT GROUND NOS. 1, 2, 3 ARE NOT PRESSED . AFTER HEARING THE LD DR, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 4. GROUND NOS.4 & 5 ARE INTER - CONNECTED RELATING TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 5,14,455/ - . IN THIS REGARD, AT THE OUTSET, LD COUNSEL MENTIONED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASE OF HITESH S. MEHTA VS. DCIT VIDE ITA NO.7726 & 7727/M/2010 DATED 26.4.2013, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT (A) FOR ADJUDICATION OF THE ISSUE AFRESH BY ADJUDICATING THE RESPECTIVE GROUND RELATING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNT. PARA 5 FROM THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 5. GROUND NO.4 RELATES TO THE ACTION OF THE LD CIT (A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS. 11,24,99,052/ - AND RS. 12,61,36,245/ - RESPECTIVELY FOR THE AYS 2005 - 06 AND 2006 - 07 TOWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE . IT IS PERTINENT TO N OTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPECT OF REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSE D ADJUDICATION OF THE LD CIT (A ) IN VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGNED LIABILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT (A) TO ADJUDICATE AFRESH ALONG WITH THE ADJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS. 5. ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDER OF THE A O/CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. MEHTA (SUPRA). WHETHER THE INTEREST LIABILITIES OF RS. 5,14,455/ - CONSTITUTES ASCERTAINED 3 ONE OR N OT IS ALSO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR COMPUTATION OF BOOK PROFITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN THE CASE OF THE HITESH S. MEHTA ( SUPRA ) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.4 SHOULD BE SET ASIDE TO THE FILES OF THE CIT (A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER GRANTING A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKEN ONLY AFTER CONSIDERING THE DECISION IN THE CASE OF HITESH S MEHTA, ( SUPRA ) . ACCORDINGLY, GROUND NOS. 4 & 5 ARE SET ASIDE . 7. IT DESERVES TO BE NOTICED THAT THE ASSESSEE FILED ADDITIONAL GROUND ALONG WITH LETTER DATED 3 1 TH JANUARY, 2014, WHEREIN IT WAS CONTENDED THAT THE INCOME ASSESSED BY THE AO OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE ASSESSEE. HOWEVER, AT THE TIME OF HEARING THE LEARNED COUNSEL ADMITTED THAT THIS ADDITIONAL GROUND WAS W RONGLY RAISED AND IT HAS NO SUBSTANCE. UNDER THESE CIRCUMSTANCES WE REJECT THE ADDITIONAL GROUND . 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ./ I.T.A. NO.8353 /M/2010 ( AY: 2007 - 2008) (BY REVENUE) 9. THIS APPEAL FILED BY THE REVENUE ON 1.12.2010 IS AGAINST THE ORDER OF THE CIT (A) - 40, MUMBAI DATED 16 .9.2010 FOR THE AY 2007 - 2008. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT THE ASSESSEE BEING A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992 IS NOT LIABLE TO PAY INTEREST U/S 234A, 234B, AND 234C OF THE IT ACT, 1961, IG NORING THE LEGAL SANCTITY OF LAW THAT THE INTEREST CHARGEABLE UNDER THESE SECTIONS IS NOT ONLY CONSEQUENTIAL BUT IS MANDATORY IN NATURE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) WAS ERRED IN HOLDING THAT INTEREST U/S 234A, 2 34B AND 234C OF THE IT ACT, 1961 IS NOT CHARGEABLE IN THE ASSESSEES CASE BEING NOTIFIED PERSON UNDER SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992 WITHOUT APPRECIATING THAT THE SAID ACT HAS NOT RULED THAT THE PROVISION S OF SECTION 234A, 234B AND 234C ARE NOT APPLICABLE TO THE NOTIFIED PERSONS OR THEY ARE EXEMPT FROM THE LIABILITY OF PAYMENT OF INTEREST UNDER THESE SECTION OF THE ACT. 4 10. THE ABOVE GROUNDS RAISED BY THE REVENUE ARE RELATING TO THE SOLITARY LEGAL ISSUE O F CHARGEABILITY OF INTEREST U/S 234A, 234B AND 234C OF THE INCOME TAX ACT, 1961 AND THE APPLICABILITY OF THE SAID PROVISIONS TO THE NOTIFIED PERSONS. WHILE ADJUDICATING THE ASSESSEES APPEALS, IN THE ABOVE PARAGRAPHS OF THIS ORDER, WE HAVE SET ASIDE THE ISSUE RELATING TO THE DEDUCTION OF INTEREST EXPENDITURE , TO THE FILES OF THE CIT (A) AND DIRECTED THE CIT (A) TO ADJUDICATE THE MATTER AFRESH. IN VIEW OF THE DIRECTIONS GIVEN IN THE ASSESSEES APPEALS, THE LIABILITY OF THE ASSESSEES U/S 234A, 234B AND 234 C SQUARELY DEPENDS UPON THE PROPOSED ADJUDICATION OF THE CIT (A) IN THE SET ASIDE PROCEEDINGS. THEREFORE, CONSIDERING THE CONSEQUENTIAL NATURE OF THE GROUNDS, WE ARE OF THE CONSIDERED OPINION THAT THE GROUND NOS. 1 AND 2 RAISED BY THE REVENUE ARE SET ASID E . 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCE D IN THE OPEN COURT ON 1 2 T H FEBRUARY, 2014. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 12 . 2 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI